tv Bloomberg Markets European Open Bloomberg July 31, 2017 2:30am-4:00am EDT
♪ guy: welcome. you are watching "bloomberg: markets" we will bring you your first trade of the day shortly. i am alongside matt miller in berlin. when we watching this monday morning -- what are we watching monday morning? hsbc shares jump. the cfo of the business tells bloomberg he is also seeing progress in europe.
we are going to ask about if the potential blockbuster drugs in the pipeline can keep this momentum going. leonard putin reacts to u.s. thirdsns by asking two in his country. -- two thirds american staff in his country. we're just thrilled to have you back here in the studio. from theur away european open, let's take a look at how futures are trading. noe on the ftse, we see change on the 50 futures and dax and down -- dax down. not a lot of direction from futures. have a three-day chart appear, you can see that we have a big jump in yields friday and we
have settled down a little bit today. ds fairly unchanged but we will see what happens when we get to trading this morning. let's see what is going on with the other asset classes. guy: let's walk you around the world and show you what is going on. day, european bad equities generally were on offer. going through in the backend might you will see what happens with france as well. the last day of the month, you are seeing maybe a little bit of rebalancing around that as the dollar is catching a little bit this morning. something to pay attention to. the chinese a little disappointing but still pointing to an improving situation this morning. pay attention as well. let's quickly show you the other half of what we are looking at as well. this is the more interesting half. iron or really responding to the
chinese data. of very strongly by 6.49%. copper has had a really solid month. the best month since january. that again pointing to the general updraft around the world. certainly some thing pay attention to as well. in the meantime let's get it first word update. here is julia starley. -- juliette starley. juliette: shinzo abe and donald trump agreed more action is needed on north korea after speaking by phone. he told reporters that the international community must take the issue more seriously and increase presser on the isolated regime. the comments, two days after pyongyang tested the second and consulates a basel -- into constant -- intercontinental ballistic missile.
nearly two thirds in the face of fresh sanctions approved by russia. kremlinage in the solution with donald trump. -- pledging to improve ties. europe's largest bank also will spend up to $2 billion buying back stock. revenue rose. -- revenues hitting in the right direction across all of our major businesses and regions. good credit control and good cost control. oil in new york briefly rose above $50 for the first time since may after opec says the group will meet next
week. it is set to take place after saudi arabia's last week. pressure on countries that are not complying. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. guy? the 25 minutes to go on to market opens. it will interesting to see how the saudi stocks opens. it has raised its outlook, saying it is the broadly stable properties beat in the second quarter. vaccines, theyer previously have been expected to roll over. joining us now from paris for an exclusive interview, be cfo. morning to you. -- the cfo. good morning to you. my question is how do you keep the momentum going? how will the newer drugs help
you do that? >> a good question. first and foremost, as you said, we had continued performance of specialty drugs and now a vaccine business is doing pretty well. haveing markets in general been close to 7% which is one of the best performances in the industry. there are nuances we are expecting. the first biologic -- 26 millionwith euros. think thisward, we will be a significant driver in our sector. guy: let's stay with the old and we will talk about the new in a
moment you were you surprised the older drugs have done as well as they had? spoke, there was an expectation that we would start to see a roll down in some of these. why has the not happened in the way that was anticipated? >> one thing we are anticipate, it is clear that there is one that is really declining, more altogether the good is there slightly better and we compensate for that. this is where we are today. life in the industries have new drugs compensating for your loss of exclusivity. environmentin this we speak less about diabetes
theg forward and more about new ones. guy: one of the blockbusters we have been talking about, the eczema drug. $37 -- $37,000 a year. do you get pushed back because that is the equivalent of an audi a4 every year for a drug that chores issues can -- cures itchy skin. >> this is going to be used for patients who have severe, which other drugs do not work. on second, not only would did hadget any pushback, we .ood comments from keep players we got early access of the commercialized.
we are holding out her plan for further success. the price may look high but if you compared to other biology --ng used in other germany diseases.ermic it has been a fair price. recognized by the external bodies. altogether we have priced at well and i think it is well received. than $3000 a month which is higher than the average salary in the united states of america. do you get concerned about the possibility of congress taking so many millions of people off of health insurance? very few people could actually afford at that price for this eczema drug. think --ally need to
more than two minutes to discuss the u.s. health care system. is paid by the currency -- insurances of the patients. you have patients who benefit on the public programs which help them to have a lower price. so theyour own program can afford to pay for it. altogether, not too much in the details. i think the pricing is in line with what you would expect. some had what expected. once again, we will have some special programs. inogether i think it is well
the environment where we cap reising. guy: can we talk about m&a? i noticed in the statement this morning that you guys are not in a hurry to do m&a. million earlier this year, which is a vaccine maker. what would it take to spark more? more broadly in the specter -- sector. are you surprised there is not more taking place? >> that is a good question. we are trying always to be disciplined with strategy. strategy leads to a limited number of potential acquisitions. in this industry
like many others do we need to pay high attention? upon the m&a in line with that. we are continuing to look at what would make sense in our strategy to m&a is not core to these strategy. our small acquisition vaccine is part of that. great to speak to you as i say congratulations on the numbers. the indication of the moment is that the stock is 2% higher. favorable on the back of the numbers this morning. the cfo of sanofi. we are going to talk about what is happening with heineken. profits popping up as you say. strongwer reports
blackstone. the news website comes after bloomberg reported on friday that blackstone was the front-runner to buy a stake in 30 billion euros of the real estate loan and properties. purchased the lender for one euro in june. profit this year may not fall after all as demand for vaccines and to medicines for multiple sclerosis. beluding some items will broadly stable this year. softbank is planning to make a direct offer for charter communications after the cadle company rebuffed its proposal for a combination with sprint an. the japanese companies plans to make the offer this week.
quarterly results tomorrow. that is your business flash. heineken's first half adjusted operating profit beat estimates. below 2 billion euros could make investors happy at the open this morning. with us from amsterdam is the company's cfo. thank you so much for joining us. what has ledask -- to these profits being the expectations? you are making -- bringing in a lot of new brands. what are the big sellers that are driving this? >> good morning. definitely very happy to report the strong first half to all four regions contributed to
volume, organic revenue and operating profit increased. volume, eightn surprise mix. a good performance in that respect. of --rst half in terms the first quarter in terms of volume had been a little lower. now if you look around the world basically europe is performing well. growth coming from a number of countries, i will single out italy, france, spain, many others with quite a balance performance. a number of for emerging markets performing very well. some newcomers that have accelerated recently like cambodia. in africa you see it performing very well. brand last year
and is contributing to volume growth this year. noticed the tiger brand has been driving growth in vietnam. lepidusntly purchased gunitas, how important are these newcomers and these craft beers to the growth of heineken as opposed to the main brand? >> thanks for mentioning tiger. it is a beautiful brand. an asian brands. an international brand for us. -- growng to throw stronger, joining -- driving the affordable premium. lagunitas,look at
we entered in 20,000 -- 2015 and have been learning about ipas. why we need is has been a successful partnership you we decided to accelerated by moving to 100%. really go after international growth for let me just -- lagunitas, it is quite vibrant for idea. there is one brand that does maintain strong growth. theill only consolidated in second half to we only have two months of consolidation in the first half. i would say that is not significant but it is a very good move and we are happy about this. say quantity,uld it is about quality.
learning more and more about this market. that goes with wanting more choice, more flavors, and ringing back the interest in general. how close did you come to 48?ing >> we are very happy about this first half performance. operationally, what in see is differently than 2015. we are's -- 2016. we expect a bit more of that in the second half. guide, we guide foreign-exchange impact. translational, we are at a big volatility moment
in terms of emerging currencies. at the beginning of the year, our guidance included an expectation that the had went from currency would not be as negative as in 2016. it was probably better than expected. fore was no devaluation instance. that could still happen. you still see volatility on a currency. we are confident to confirm it. more broadly right now, it does seem that equity -- activism is becoming more of the feature. you have m&a activities surrounding unilever. do you expect this to become part of your landscape as well? do you embrace it? you are delivering extra growth. do you think that is enough to
maintain where you are in terms of the level of interest from the activists? the current that environment is telling you more than ever is never be complacent about your performance. always look at what you can do debtor -- better. long-term sustainability is about continuing to be centered on all customers. this is a bit of the reason why we gave the guidance back in 2014, which is to say this is what we call continuous improvements. to be going to continue skewed toward the top line because we do consider that you have to grow your product. you have to bring what the consumer likes and bring beer they will continue to enjoy. at the same time you are to continuously work on your cost. you also have in terms of
communication, to be very transparent about what they get when they come into heineken. they get the company skewed that youstainability are in perpetual improvement. we are planning to continue that. matt: you mentioned the popularity of ipas. it is clear and the market is full. in europe, recently italy and -- i havenow must noticed the demand is much bigger than the supply. is there a possibility you can bring more ipas to europe? if you're making more acquisitions, are ipas high on the list? >> we have a number of ip brands. -- ip a -- ipa brands.
the netherlands have a -- has an idea version. -- ipa version. lagunitas can come to more countries. matt: thank you so much for that. hopefully you can do your best to bring more to berlin. the cfo of heineken, we appreciate your time and congratulations on beating the street expectations. guy: heineken has crawled higher this morning. another one, we just spoke to the cfo as well. at the moment it looks like both heineken and sanofi will be higher. it looks like we are going to see a solid performance from them. we are also going to be monitoring the broader market this morning. to be honest, european equities
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guy: welcome back. we have around a minute to go for european equities cash open this morning. let's talk about where we think that opening is going to go. more interesting and individual stock level, matt will talk about some of the names of the moment. we saw a significant selloff friday. many of europe's markets were down by around 1%, so we not rebounding off that. final day of the month, matt miller. -- whatl the spring will all this bring? matt: when we were talking to the cfo of sanofi, up 6% for both of them, so fairly impressive. but if you look at the const string, you can do this with any
equity and con p, you can see that with sanofi here on our it allutperformed by the cac tradable index, and the euronext health care index. the biggerforming, benchmark, and maybe that means nobody has more room to run. it is certainly indicated higher this morning. guy: we will watch heineken this morning as well. keep an eye on the metal stocks as well. we saw some fairly impressive gains in terms of copper overnight and iron or. the ftse 100 is opening up around .1%. as stock level, you may see some fireworks this morning. and index level, you may not. -- at the index level you may not. this morning, trading just a little softer this morning, and stoxx 600 going nowhere in a hurry. not exactly a writ-roaring start, there is an individual names to focus on. manus cranny, what have you got?
as iron ore is moving, you saw the iron moving. the indexes the highest since 2016, and it is that believe in the growth story, i had it on the global cfo at ubs this morning from zurich. china is one of those trades that they want to do. european facet, the complex opening this morning up to performance. you're waiting for the first flash on hsbc. industrials off by .2%, but financials are going to lead the charge. asp best hsbc, they want to see higher rates. you have us believe in growth, leaving europe, and the issue this morning, we were talking about the velocity of the euro, the rise of the euro. he said to me, it is not so much of the endpoint of where the euro gets too, it is the speed with which it travels there
because the ecb to intervene. they see more tolerant of a higher euro on the way. the stoxx 600 is up .8%. week for the bank of england, not least because some of the members are about to go on strike, but also because you are going to get some new growth levels on the bank of england. where is that rate hike? heidi is disappeared with the rate hikes stake. the possibility of a rate hike in the u.s. it seems to have completely evaporated, but you are going to see the euro get into a new plan. 95, but you are going to see this euro rise and sterling fall. hsbc at the bottom of your screen up 3.13%, $2 million by factory -- million dollar buyback. the right decision he believes they have made in choosing paris at the relocation spot, possibly
to go there. plumbing, as john cryer said to mat last week, the plumbing is going to be hard to move. markets, wee gilt are up and running. one point 20. let's see what the bank of england actually deliver this week. guy: looking around at some of the stocks, like manus said, hsbc absolutely flying this morning. -- the movmov screen screen set up this morning. by 1.31%, some of the other growth stocks are performing reasonably well. mining stocks are also doing well, very solid overnight performance in terms of the metal. that seems to be the reaction to what we saw in terms of the chinese data. we may have missed a little bit in terms of expectations, not by much. performance,tock hsbc really charging ahead. it is going to have a lot of points into the market.
on the downside, one to highlight rolls-royce. it does seem as if there's some caution around the 2020 target this morning, and that is lowering the stock significantly, down by 3.23% this morning, so quite a drop in terms of rolls-royce, but hsbc the real driver on the upside, particularly for the london market. matt: i want to talk oil right now. rosen new york briefly above $15 for the first time since may after opec said the group and its partners will meet next week. the abu dhabi meeting, co-chaired by kuwait and russia, is set to take place after saudi arabia said last week it would step up pressure on countries that are not complying. joining us now on set is james he investmentccl management, and in singapore, we have mark cudmore, bloomberg analysis macro strategist. mark, let me ask you first. it looks like we have a lot of commodities, last week we were talking about copper. iron ore is doing well, oil is doing well.
the whole sector right now looking a little more bullish? there are a lot of micro-stories here, which are driving the different asset. you of the saudi arabia story, the venezuela story, even shall extending the force majeure cut on body like crude. when u.s.time inventories have been falling, and their positive signs of consumption demand. the short-term story continues to be good. structurally, the longer-term story is that it is supply-driven, and there is this lower high every time we get a spike up. at some point, it will probably be feted again. as you say, the other commodities are trading very well, iron or in copper are really the strong stories at the start of this week, and that sends a positive message about what is happening in china. what do you think about this again we have seen on the back of some positive signals and china? do you want to put your money
there as well? there are some signs that the people's bank of china r&d been quite accommodative, and that is crucially important in terms of what lies ahead. however, i do worry that the leading organization of china's economy dealing with the three bubbles of excess credit, excess building, and huge investment is going to be quite painful and difficult. so either one will be watching funds close the market in the second half. guy: mark, let's focus a little more on this oil story we're watching. inarly, china big driver soviet commodities at the moment, the u.s. story a big factor. you will not be able to see this, i of the ccr be screen up for the brent contract, and we betweena slight dip now the front month and the second month, the second month is trading significantly lower than the front month. the problem is, the rest of the curve is still sharply upward sloping. if i go five years backwards and
compare the charts, this is the current slope here, which goes upwards. five years ago, the slope was down, down, down. that is a morsel the story, because you do not want to stall oil. what would it take to get the whole of the oil curve sloping downwards? and how far away do you think we are from that? the situation five years ago, was that oil was a predominately demand-driven market. oil is seen as a barometer of global growth, oil prices went up when the economy was doing well. that is when we got the massive bubble in 2008, and the big crash cannot win there was absolutely, the market turned lower. i think we are we are seeing now, since 2014, a bullet really registered the shale gas revolution. this is a supply-driven market. certainly last year, it was expect to happen by the middle of this year, now they're going
by the end of this year. but they are hoping we will get to market that is more balance between demand and supply, and we will see a more normal curve. at the moment, that demand capture is taking more time in a thought. james, what would be the implication of a more normal oil market? when you think about what happens to the global oil -- economy, cheaper oil markets are a good thing, as they allow consumers to be able to take that extra buck and spend elsewhere. if we start to see oil turning a corner at prices normalizing, i don't know what that means. what would that mean for other things? james: much less than it used to. when the economic textbooks were being written back in the 1970's, it was a very clear expectation that oil was dominant. now oil is heavily under siege from new energy. the energy intensity of hydrocarbon usage in developed economies is much lower, and that is why kyle oil prices are much more -- much less important
to economy. matt: mark, i added chart here, 7131 on the bloomberg. it shows venezuelan oil imports to the u.s.. trend,ly, it is a lower and we have other geopolitical hotspots around the world. our geopolitics going to have an effect on the oil prices, a negative effect going forward? mark: geopolitics always have an impact on oil prices, less than they used to have. a couple years ago, as soon as you heard of flare up in the middle east, suddenly there was a spike in oil on the expectation that there was a supply disruption. the marginal supplier of oil is shale gas in the u.s., and that is a big shift from the previous decade. suddenly, whether as a supply gap provided elsewhere, then suddenly shale gasket of their production very quickly. they can turn off or on the supply much faster than some of the more traditional forms of supply, and therefore they make
up for this balance quicker. with that means is, geopolitics still has an impact, it does not last as long. if anything happens for venezuelan disruption, there might be a spike in wti, but it will not last long, because shale gas production will fill the breach. matt: this is the bloomberg dollar index over the last 12 months. obviously, the dollar has been punished this year, down almost 10%. thatve a bloomberg story at the same breath says you cannot blame the president for this, but we are blaming the president for this. what do you think is behind this and how does the u.s. administration feel about? mark: the structural barrier story for the dollar remains, it is important to emphasize that the u.s. still has very clearly negative real yields for most of the curve. so that is a big factor. plus they have a current account deficit, so it is always going to wait against the politics. you do not see that kind of negative going away soon. but that is not the main driver.
are certainly some relief of the politics side, and you might see a little spike in the dollar. but overall, the structurally bearish dollar store remains. it is an overall negative -- expensive currency with negative fundamentals. is improving.wth people are re-leveraging into investments in emerging markets, and that is another negative on the dollar. who knows what kind of spikes you might get in the next month or so? matt: mark cudmore, bloomberg macro strategist of singapore. you can follow marks insights in the entire teams on the bloomberg, just type mliv . james bevan of ccl he investment management is going to stay with us. we have a lot more to talk about. guy: let's talk about what is happening with tv function. i am on the landing page right now about what you have years the interactive tv option. the radio event coverage coming up. you also have this function gives you an idea of what most-watched videos are on tv
. tesla delivering the model three over the weekend, the first look. we have a great video running on the terminal, and on the website, looking at the first look at the model 3. the range of real surprise. for the second-most-watched, and i expect this will creep up, is manus cranny's interview with of hsbc, one of the real standout stocks this morning. that is certainly worth paying attention to. you get the great interview, great interview manus did earlier. i will play that for you as well a little later. up next, we find out where guest is a little nervous but france, and pulling back on european equities. conversation continues with james bevan, next. this is bloomberg. ♪
♪ matt: welcome back to "bloomberg markets." matt miller here in berlin. guy johnson with is in london. let's check in on the markets right now. green arrows across the board. futures indicated little to no direction, and now we see a direction, especially there in london with the ftse up .6%, i am going to go ahead and guess that the pound is down a little bit against the u.s. dollar. that is typically the way it is set up. my, how do you see the currency trade right now? guy: the currency trade is
interesting. you also have a bunch of other things happening with the london market. hsbc is a real driver, and heavyweight in terms of its performance. it is very much on the front foot this morning, but 3%. as the mining and oil stocks on the front foot as well, is what we've just been discussing at the beginning of the 8:00 hour talking about the very strong performance overnight as well, some of the metals, iron ore in copper driving ford. let's focus for a different direction now on what is happening in europe. james bevan is with us from ccla. he is reducing is equity weightings towards continental europe. he is a little nervous but france in terms of what is going on there, it in stores of the stock picks, there's still some things he likes, michelin, credit agricole, a few things. bevan, why are you nervous about what is happening with with europe? james: two rather separate issues. first of all, the euro itself is
clearly a cause for concern. actually, if i was to think about what is happened to corporate earnings numbers, against expectations next year, it is not 10.5 percent earnings growth, i think you're going to be very lucky get about 8.5. this is again that is not quite as good as we hoped. guy: get money continues to flow into european equities. the momentum, do you end up missing out? james: and the global growth is clearly supported for the euro story, so for example, if we were to say, let's equate stock market valuation with overall economic growth, i think you could say europe has another 18% to go before we get the equivocation. however, i do think we are taking an awful lot on trust. when i look at the french economy, i see a lot of optimism that monster macron will deliver.
i see considerable economic momentum that is being driven by lots of government spending in the last year, which is now beginning to dissipate. and of course, the consumer has been spending, on credit. so i worry that the french economy may dissipate, and that i think credit agricole is extremely well-placed to participate in the dement -- momentum of the domestic economy. grossdo think the global names, the ones it will shine in the next decade, that is vhm, michelin, for me, the car manufacturers are lovely place to be. you still have ties in the electric car, don't you? james: i certainly do. matt: sitting here in germany, we're going to have a big conference on wednesday here in berlin. dubbed,te, it is being because of the obvious catastrophic concerns about diesel motors, the possibility of them being banned in
stuttgart in munich. you think mercedes, bmw, volkswagen are stocks investors should steer clear of here? clear ofwould stay them for the moment, if only because their ambitions are extremely hard to reconcile. for example, we have bmw saying they intend to talk about their internal problems, raise productivity by 2020, and by 2025, they want to be a global leader in electric cars. they cannot all be global leaders, to this market is already extremely cluttered in terms of ambition. example, we have jaguar saying they are going to come out with a great car in 2020, and even better car series in 2023. we have of course the non- traditional competitors turning up the heat. so to me, it is early to say who is going to be a winner, and i do worry that this is again value players may get
their fingers burnt. if you do want to play the car players, i do think sticking to the best names, the bmw's of the world, is the right strategy. and bmw seems to be slightly ahead of the others on its electric car plan, at least it has some very famous i-8 and i-3 models. what about the other big what youcarmaker, think of a tesla, it's extreme valuations being considered at the same time as the fact that people automatically equate that product with electric car manufacturing? james: tesla is an enigma. i looked at the company and i can reconcile myself to the hope and expectation in some ds, but for me that is not enough cars. it is much more about factories and sustainable energy. if you were to look at the track , the leaderon musk of tesla, in driving forward innovative technical change, he is one of the very few men in
whom one might reasonably want to play some faith. guy: look back at the men of history who have made big changes, and whether you can put elon musk on that list, people cash talk about apple'sc pile and then equated to tesla as well. james bevan is going to stick around with us. this is being flashed across the bloomberg right now. thea is said to be asking waldorf owner and bank to sell assets abroad. they're selling for and assets, and to repatriate the money from those sales. interesting that may be china's story remains of one-way street when it comes to investment in that country. , a busy morning for earnings from hsbc to heineken. heineken lower this morning. we thought initially that stock would pop. we're not getting that move this morning. what is happening with some of the major stock movers. we will give you those details. this is bloomberg.
♪ welcome back to the european open on "bloomberg markets." the breaking news is the chinese to getent telling anbang rid of its foreign assets. that includes the waldorf-astoria hotel, famed for its links to u.s. presidents. there was a great story on the bloomberg last year about secret train line
directly from the new york city airport into the waldorf-astoria, then president went on to use it for decades. disused, andbeen the hotel, which presidents used to stay at all the time, that changed with president obama because of the chinese ownership. now it is interesting that the tonese are ordering anbang sell that hotel, especially considering we have the very famous hotel ea as the current president of the united states. i thought it was an interesting alsoction there, guy, but as you mentioned, a very interesting bit of political news on the chinese side. guy: it is big market news as well in so many ways. let's bring james bevan into the conversation. if the chinese start insisting the foreign assets are sold in the assets are perpetuated, what impacted that have? matt: we can have a meltdown. you need chinese cash flow, and to a certain extent, the
underfunding of the u.s. deficit and the two pillars for deficit support. if one wants to think about what they've done to property prices, there is a huge asset deflation on the back of these cash flows. the rug is most certainly pulled for the markets. fed this is, added to the two, what would be the imperative for china to push really hard on this? why would china want to get aggressive on this? james: if we look at the high-frequency data on chinese it -- china's economy, it has been weakening. taking interest rates down -- guy: this can be a destabilizing factor. more: but they were a much about the domestic economy than they do about the global economy. if china feels its economy is suffering because of inadequate supply cash, they will say, you have to bring it back, because we need it now.
♪ matt: hsbc shares jump on a strong pre-tax profit and a $2 billion share buyback. he iso tells bloomberg also seeing progress here in europe. so nobody raises its outlook as it gets a shot in the arm from the sale of vaccines and cost cuts. the cfo exclusively tells bloomberg its new blockbuster drug had a very strong start as well. russian retaliation. vladimir putin reacts to new u.s. sanctions by ousting nearly two thirds of u.s. staff in his country. how will president trump respond?
welcome to "bloomberg markets," the european open. i am matt miller in berlin, alongside guy johnson in london. guy: 30 minutes into the trading day, this is how we look this monday morning. we find ourselves with a market that really is going nowhere in a hurry, but remember, we were very negative friday. london is outperforming today. less to do with what is happening with brexit, more to do with the stock matt mentioned at the top. hsbc, very strong performance this morning, as a result of which is driving the ftse. we are also seeing some of the mining stocks, oil stocks doing very well as well. 74.06. vladimir putin, as we have been discussing, has said he hopes there will not be a need for further retaliation against washington after his government ordered the u.s. two/staff -- to lash staff in retaliation for
new sanctions by congress. joining us now is bloomberg's kathleen hunter, still what this is james bevan it ccla. kathleen, i want to start with you. how serious is this? we now have the same amount of diplomatic staff in russia as russia has in washington. is it such a big deal? i think it is a bigger deal in terms of the trading back-and-forth of sort of posturing and positioning when it comes to the different policies the u.s. has towards russia. for instance, i thought it was interesting what putin had to say about the retaliation. he said he hoped there would not be the need for more retaliation, which is a thinly veiled suggestion that there could or would be if the u.s. would take additional action. it is more interesting, the rhetoric in the posturing, the necessarily the specific policy implications thus far.
matt: i do not think it is failed at all. at all.d let's ask tell u.s. diplomats are seen in moscow. the u.s. media just kind of assumes that any russian diplomats are spies, basically kgb. isn't the same vice versa -- is it the same vice versa? reporter: u.s. diplomats serving in moscow are certainly under a lot of surveillance. they are heavily monitored. there is been a growing number of instances surrounding them that we have read about, when they have been the target of various forms of harassment, that sort of thing. certainly, being a u.s. diplomat in moscow now would be a tricky job for sure. and there are other areas we can focus on be on the russia story. one is what is happening in terms of the white house. let's talk about the republican party versus donald trump white house.
there does seem to be pressure growing for the republicans to move on to tax reform. health care and move on to tax reform. the tweets from the president indicate he does not want to do that. which way does this go? reporter: it is very interesting. here we are, it is practically august. congress is about to go -- the house is only going, the senate is about to go. i have three weeks until government funding runs out, so they have to figure out what to do about that. then we are into october. it just seems like time is running short in the legislative calendar. so taking another swing and health care is a difficult prospect, especially if you are going to do tax reform as well. so i think it is telling that we saw paul ryan on the sunday shows yesterday, we also saw the ways and means chairman evan brady, bill on the sunday shows, and they were talking all about tax reform. it seems like they are very ready to turn the page and start
looking at that. but as you pointed out, the president is ready, in a series of tweets of the weekend, he was taunting republicans, particularly senate republicans, saying they look like fools for not passing something. that they need to show that they are not, quote, total quitters. we are seeing the white house working at cross-purposes would congress and other republicans want to do. this infighting is really a common theme. guy: does this put you off investing in the united states right now? james: it is a risk issue for global markets generally. further a long. , mr. trump is at this appetite to do what he describes as draining the swamp, which means getting rid of people who are just in it for politics, trying to get people back in charge, to get businesses to do it they do best. for me, i think he sees health care reform as one of those issues where he wants common sense, in his perspective, all
the day rather than politicians. in terms of what that means for the u.s. equities market, i think the u.s. equity market fourget 2% growth, not the percent to 5% mr. trump talked about. i think we can be talking a 2700 points for the s&p 500 this time next year. share,uld be $150 per that is perfectly doable. matt: james, we have talked about in the past with kathleen, president trump has not had one major keys of legislation across his desk since he has been in the oval office. a the one hand, it is disappointment because you are not getting the health care reform, tax reform, the infrastructure spending, the stimulus you were hoping for in november. on the other hand, is that a good thing? is gridlock good? it doesn't look like even with republicans in congress and the white house, they're going to be
able to get anything at all done. james: there is gridlock. from the democratic perspective, it is important that we do have these checks and balances. that said, if you were to look at the number of executive orders mr. trump at sign, particularly dealing with deregulation, there is a lot going on that is positive and supportive a better tomorrow for the u.s. corporate sector. guy: we will leave it there. james, thank you very much. james bevan joining us from ccla investment management. kathleen hunter, as ever, covering what has been coming up over the weekend. it is a monday morning for the stories surrounding the white house. we will carry on that conversation throughout the day. james is going to be joining bloomberg radio, matt and i, and we will enjoy that conversation. banking buybacks. hsbc plans to buy back stock of up to $2 billion as it reports better than estimated profits. we come back to that story and the company's cfo.
have an industrial metals, a lot arether commodities also we seeing health care stocks outperforming, among them, sanofi. it says profit will probably hold steady, helped by demands for vaccines and medicines for multiple sclerosis. i know you and guy spoke to the cfo earlier. it was an exclusive interview. here is what he had to say. this industry sector, like many others, we need to be a little higher attention on the price you pay for acquisitions, and of course, depending on the in line with that. the numbers overall positive today, and we are seeing a positive share price reaction. the ceo did also say the picture in diabetes is still top overall. moving on to the downside. i am looking at rolls-royce down
.3%, dropping the most in five months. this comes after a report in the on sunday, or rolls-royce cautioned investors not to treat one billion pounds of cash flow by 2020 is affirmed target. it also said it was concerned market can be ignoring significant operational and challenges among other things. that seems to be what is driving this share price lower this morning. we also have imperial brands dropping for a second day. we did see a drop in a few of the tobacco companies on friday. dropped almost 7%, imperial brands drop almost 4%, after the fda's proposal to lower nicotine in cigarettes to non-addictive levels. interesting note from rbc today, saying that actually, the selloff seems a little excessive when you look at some of these, particularly imperial, because only about 25% of its exposure is to the u.s. market compared with altia, which gets all of
its profits from the u.s.. we are still seeing imperial brands lower today. matt: i wonder what a non-addictive level of nicotine would be, and then, wouldn't you just smoke a lot more cigarettes? interesting story. certainly investors have been selling off tobacco stocks in the last couple sessions on that. let's get the bloomberg first word news. for that, we go to sebastian salek. >> japan's prime minister and president trump have agreed more action is needed on north korea. after speaking to trump iphone, abe told reporters the international community must take things more seriously. the comments come just two days young testfired its second intercontinental ballistic missile in a month. said he vladimir has hopes that will be no need for further retaliation against washington. his comments came after moscow court of the u.s. to
diplomatic staff in russia in the face of sanctions approved by congress. oil in new york reaches $50 a barrel for the first time since may. the abu dhabi meeting, co-chaired by kuwait and russia, is set to take place after saudi arabia said last week it would step up pressure on countries that are not complying. andin venezuela, please demonstrators clash as the country held a contentious vote on remaking the constitution. the chief prosecutor's office reported 10 deaths yesterday, while seven police officers were wounded when explosion in opposition stronghold. the government this morning to continue its push for total political dominance over this what-prosperous opec nation. global news 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. guy, matt?
guy: hsbc second-quarter profit beat analysts' estimates, and it will spend up to $2 billion i'm back stock. manus cranny spoke to hsbc's finance director. here's what he had to say. we have two of our businesses that have outstanding performance in the second quarter. with good revenue progression coming through in equities business, coming through our global liquidity and task management, coming to the global banking business as we continue to support our large multi-national trading corporate and financial institutions. retail bank wealth management, also a good, moving forward with some growth in the mortgage business within the united kingdom. but more broadly across europe, we're seeing businesses continuing to develop nicely. i would not quite call it a raging recovery at this, but it is certainly encouraging
progress in their two most recent history. is realne thing which is the news about geopolitics. korea,ncerns in north more concerns with regard to u.s.-russian relations. when you travel around the world and talk to the financial elite, what do they talk about, the consideration in terms of geopolitics? are they concerned about trump? does that stop them from making decisions on the u.s. side? it is part of the decision-making process at any business in the world at this point. our focus is on trying to provide insight on how that impacts market opportunity for our customers, and then providing the support they need. but there is absolutely no doubt that the geopolitical uncertainty, whether in the european environment, certainly informed in some degree by brexit, and farther a field, informed decision-making and business level. that being said, we have seen good progress across a broad
base of our markets, within the americas, european markets, middle east, and asia, as our numbers pan out. this is simply just a feature of how we support our customers on an ongoing basis. that action is adapting to a new risk environment. there's been a shift in rhetoric, tone, and intonation. the fed, ecb, etc.. does the fed cap the ability to toiver -- have the ability deliver on higher rates to 2018? guest: we have been very pleasantly surprised by the way the federal reserve has moved rates for this year. moving into the latter part of backear, wheeling quantitative easing is probably the thing we expect to happen in the fourth quarter of year. another rate increase, from our perspective, would always be welcome. we carry a surplus deposit base of some 400 billion u.s. dollars
not all denominated in dollars, but then rate movement clearly helps earnings and hsbc. so what has happened thus far in 2017 has been very supportive, certainly for our operations, and to the extent the federal reserve can continue to move that forward as they have done with great confidence so far this year, would certainly be encouraging. hsbc cfo speaking to manus cranny earlier. joining us now, stephen morris. hsbc has delivered some great numbers this morning. stocks risen really quite nicely. yet, much of what is being said , why is the market suddenly more in love with hsbc this morning that was on friday afternoon? hsbc is shifting from a restructuring story into growth story. it looks like they might do some more stock buybacks. they announced they will give another 2 billion back to investors today. investorsank results, have been conditioned by years
of underperformance and bad surprises, so maybe some of them are just waiting until they've seen the numbers come out on the day before they are putting their money in. what actually drove the earnings here? bank boardinvestment very well on the advisory side. not on the trading site. but also, you have that pivoting to asia, were mark -- margins are getting higher, and there are just a few are below the line items, fewer misconduct charges, fewer other issues. really, we are seeing a much better quarter than this time last year, they are still not totally out of the woods yet. if you are taking this business over and going to come in as the new cfo, the forward momentum has now been delivered. say, is getting on the front foot. from the exiting point of view, do you feel if you've have taken
it through difficult. ? is certainly a different tone coming out of the cfo this year. with them set to retire next year, he must be thinking about his legacy. he does not want to let half-finish the job. he wants to leave the bank in a better place. interestingly, the better the results get, the stronger the internal management team claim gets to replace them, rather than bringing in an external cfo, they argue that we have delivered on her own strategy, this is an organization that says the rewards loyalty. but of course, their new chairman, mark tucker, is an unknown quantity. he spoke to the current crop of executives, but we will really see where that goes in the next couple of months. stephen, thanks very much. stephen morris talking to us about what has to be the big taking story of the day, aspc's share buyback. up next, teslas model 3 rolled
3. said the company now has more than 500,000 ,eservations for the vehicle customers deposit $1000 each for that. emily chang was at the launch. >> the big challenge of course will be keeping up with demand. the model 3 was unveiled to pay type last year. teslas inroads into the mass market, with a base price tag of $35,000. elon musk is reaffirmed he will be churning out 20,000 model 3's per month by the end of the year, 50,000 a month by the end of next year, but even musk admits it will be a hellish task. >> we are going to be in production hell. welcome. welcome to production hell. >> [laughter] we are at least six months, maybe longer, working alongside
the journey through hell, and if you're >> going to hell, keep going. [laughter] >> some say the model three could be as transformational as the iphone, and it may well be sk's most daring move yet. but will it be a car that will change the future of all cars? emily chang or, fremont, california. matt: there is also a $44,000 version. it is an incredibly impressive feat that they have delivered any of these cars, but it is going to be very difficult, as elon musk said himself, to ramp up production. that is the amount of model s teslas they are able to produce in a year right now. if they do this, it will be a true wake-up call for everyone else in the industry, especially as diesel comes under serious
pressure here in europe. talks about banning diesel from auto cities like stuttgart and munich. they are banning diesel cars completely. i am sure the political climate is not going to allow that to go beyond talks, but it is possible in other countries the you can see it actually happened, so the demand for electric cars is going to be much higher. you are going to see a lot more people come out, like gm has, with true competitors to this chevy volt.ike the a benchmark, though. 310 miles, the range. benchmark, down as a i think, is absolutely sensational. that is the big issue a lot of people have. if you can get the range up to that kind of distance, i think that is a real step forward for this industry. matt: absolutely. that works out to about $140